In Samoa the opportunity cost of producing 1 coconut is 4 pineapples, while in Guam the opportunity cost of producing 1 coconut is 5 pineapples. In this situation:
A) if trade occurs, both countries will be able to consume beyond their original production possibilities frontiers.
B) Guam will be better off if it exports coconuts and imports pineapples.
C) both Samoa and Guam will be better off if Samoa produces both coconuts and pineapples.
D) mutually beneficial trade cannot occur.
Correct Answer:
Verified
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